Members More Than Happy To Be Put On 'Debt Diet'
Members of Houston Texas Fire Fighters FCU have happily gone on diets.
Members turned to the CU to borrow some $2.5 million during the two-and-a-half-week "Debt Diet" promotion to pay off outside loans, according to Tom Rowlands, VP of lending.
The June promotion that offered up to $25,000 with a five-year term at 8.9% APR was designed to "fight bill obesity," Rowlands said. But, as a bonus, it also attracted new members.
"One of the things we noticed was that more people came in and joined the credit union just to get the loan," he said. "Some also brought over their car loans and opened checking accounts and some went out to buy new cars after (paying off their other debts.)"
The promotion that included direct mail and newsletter advertising along with fliers passed out during drive-thru transactions was the second of its kind.
In 2002, a similar offer at 7.9% interest drew in $4 million in loans in two weeks, Rowlands said. "It was very well received," Rowlands said, adding that those loans have fared well.
HTFFFCU, which has $165 million in assets and 16,000 members in a closed field of membership, has been pleased with the latest response, especially considering that participants of the 2002 loan were not eligible this time around.
"We had such a huge saturation the first time around," he said. "And those who applied for and received the loan at that time didn't qualify for this loan."
Lisa Summerlin, marketing director, said that Houston Texas Fire Fighters turned to a third-party agency with this promotion to help create the clever "debt diet" materials. The first promotion was "straightforward" and developed in-house, she said.
Rowlands said besides the interest rate difference between the two promotions, no changes were made in the requirements. However, after "late pay offs" the first time around triggered a few penalty charges, the credit union asked for better documentation from members with the current promo. "What we did learn was that we needed to be more specific in what we asked for from the members during the application process," he said.
During the 2002 promotion, the credit union just had the members bring in their bills and let the credit union pay them off. Unfortunately, some of those payments didn't make it to the creditors before their due dates.
For the debt diet promotion, Rowlands said, members had to provide signed letters to close the accounts and specific addresses on where pay offs were to be sent.
"It went a little bit smoother this way," he said.
Rowlands and Summerlin said they would monitor the promo and may repeat it.